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Exhibit 99.2
SABRE MANUFACTURING, LLC
UNAUDITED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2013
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SABRE MANUFACTURING, LLC
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SABRE MANUFACTURING, LLC
| June 30, 2013 | December 31, 2012 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 3,202,921 | $ | 2,329,145 | ||||
Accounts receivable | ||||||||
Trade | 153,084 | 1,058,758 | ||||||
Related party | 334,675 | 909,975 | ||||||
Inventories | 2,664,264 | 2,244,979 | ||||||
Prepaid expenses | 24,000 | — | ||||||
Deposits | 6,404 | — | ||||||
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Total current assets | 6,385,348 | 6,542,857 | ||||||
PROPERTY AND EQUIPMENT, NET | 1,441,729 | 1,596,691 | ||||||
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| 7,827,077 | 8,139,548 | |||||||
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LIABILITIES AND MEMBERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Current portion of long-term debt | 54,292 | 45,091 | ||||||
Accounts payable | ||||||||
Trade | 1,080,487 | 625,707 | ||||||
Related parties | 580,000 | 586,761 | ||||||
Accrued expenses | 144,142 | 267,940 | ||||||
Customer deposits | 191,638 | 20,323 | ||||||
Deferred rent | 6,000 | 12,000 | ||||||
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Total current liabilities | 2,056,559 | 1,557,822 | ||||||
LONG-TERM DEBT, LESS CURRENT PORTION | 98,793 | 106,478 | ||||||
MEMBERS’ EQUITY | 5,671,725 | 6,475,248 | ||||||
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| $ | 7,827,077 | $ | 8,139,548 | |||||
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See notes to financial statements.
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SABRE MANUFACTURING, LLC
UNAUDITED STATEMENTS OF INCOME
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
Net sales | $ | 5,791,824 | $ | 13,384,599 | $ | 11,274,473 | $ | 28,420,762 | ||||||||
Cost of sales | 4,481,545 | 11,248,724 | 8,938,009 | 24,555,031 | ||||||||||||
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Gross profit | 1,310,279 | 2,135,875 | 2,336,464 | 3,865,731 | ||||||||||||
General and administrative expenses | 622,024 | 563,908 | 1,087,000 | 1,321,026 | ||||||||||||
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Operating income | 688,255 | 1,571,967 | 1,249,464 | 2,544,705 | ||||||||||||
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Other income (expense) | ||||||||||||||||
Interest expense | (4,239 | ) | (2,183 | ) | (4,239 | ) | (2,183 | ) | ||||||||
Interest income | 704 | 792 | 1,452 | 1,546 | ||||||||||||
Miscellaneous | 6,800 | — | 6,800 | — | ||||||||||||
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Total other income (expense) | 3,265 | (1,391 | ) | 4,013 | (637 | ) | ||||||||||
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Net income | $ | 691,520 | $ | 1,570,576 | $ | 1,253,477 | $ | 2,544,068 | ||||||||
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See notes to financial statements.
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SABRE MANUFACTURING, LLC
UNAUDITED STATEMENTS OF CASH FLOWS
| Six months ended June 30, | ||||||||
| 2013 | 2012 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 1,253,477 | $ | 2,544,068 | ||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 197,701 | 201,830 | ||||||
Changes in: | ||||||||
Accounts receivable | 1,480,974 | 263,048 | ||||||
Inventories | (419,285 | ) | 38,578 | |||||
Prepaid expenses | (24,000 | ) | — | |||||
Deposits | (6,404 | ) | — | |||||
Accounts payable and accrued expenses | 324,221 | (702,435 | ) | |||||
Customer deposits | 171,315 | (756,100 | ) | |||||
Deferred rent | (6,000 | ) | — | |||||
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Net cash provided by operating activities | 2,971,999 | 1,588,989 | ||||||
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INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (10,670 | ) | (56,102 | ) | ||||
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FINANCING ACTIVITIES | ||||||||
Payments on long-term debt | (7,495 | ) | (5,524 | ) | ||||
Payments on capital lease obligations | (23,058 | ) | (10,435 | ) | ||||
Member draws | (2,057,000 | ) | — | |||||
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Net used in financing activities | (2,087,553 | ) | (15,959 | ) | ||||
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NET CHANGE IN CASH | 873,776 | 1,516,928 | ||||||
CASH, Beginning | 2,329,145 | 472,098 | ||||||
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CASH, Ending | $ | 3,202,921 | $ | 1,989,026 | ||||
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See notes to financial statements.
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SABRE MANUFACTURING, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
As of June 30, 2013 and December 31, 2012 and the three and six months ended June 30, 2013 and 2012
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state our financial position, results of operations and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. The accompanying financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2012.
Company Operations
Sabre Manufacturing, LLC (the “Company”) manufactures and sells above ground steel storage tanks utilized for solid and liquid containment by businesses located throughout the United States.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant Customer
During the three and six months ended June 30, 2013 and 2012, the Company sold a substantial portion of its product to one customer. Sales to this customer totaled approximately 86% and 74% of total sales for the three months ended June 30, 2013 and 2012 and 87% and 72% of total sales for the six months ended June 30, 2013 and 2012, respectively. At June 30, 2013 and December 31, 2012, the amount due from this customer amounted to 69% and 46% of accounts receivable.
Subsequent Events
The Company has performed a review of events subsequent to the balance sheet date through October 3, 2013, the date the financial statements were available to be issued, and has determined that there are no material events that have occurred during this period, except as disclosed in Note 9.
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SABRE MANUFACTURING, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
As of June 30, 2013 and December 31, 2012 and the three and six months ended June 30, 2013 and 2012
NOTE 2 – RELATED PARTY TRANSACTIONS
Accounts Receivable
At June 30, 2013 and December 31, 2012, the Company was owed $334,675 and $909,975, respectively, from a related party through common ownership. The amount is expected to be repaid under normal business terms.
Accounts Payable
At June 30, 2013 and December 31, 2012, the Company owed $580,000 and $586,761, respectively, to related parties through common ownership. The amounts are expected to be repaid under normal business terms.
Sales
The Company had sales to a related party through common ownership in the amount of $5,025,675 and $11,088,666 for the three months ended June 30, 2013 and 2012 and $9,762,235 and $20,332,298 for the six months ended June 30, 2013 and 2012, respectively.
Rent
The Company leases its building from related parties through common ownership under separate lease agreements. The first lease requires monthly payments of $12,000 and expires in December 2016. The second lease requires monthly payments of $12,000 with escalating payments each year and expires in December 2013. Rent expense under the leases totaled $72,000 and $69,000 for the three months ended June 30, 2013 and 2012, and $138,000 and $144,000 for the six months ended June 30, 2013 and 2012, respectively.
NOTE 3 – INVENTORIES
Inventories consist of the following:
| June 30, | December 31, | |||||||
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Raw materials | $ | 1,319,326 | $ | 872,620 | ||||
Work in progress | 758,100 | 807,457 | ||||||
Finished goods | 586,838 | 564,902 | ||||||
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| $ | 2,664,264 | $ | 2,244,979 | |||||
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SABRE MANUFACTURING, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
As of June 30, 2013 and December 31, 2012 and the three and six months ended June 30, 2013 and 2012
NOTE 4 – LONG-TERM DEBT
The Company had the following long-term debt outstanding:
| June 30, | December 31, | |||||||
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Capital lease obligations. See Note 5. | $ | 132,294 | 123,283 | |||||
Note payable to a bank in monthly payments of $1,498, including interest of 11.85%, and matures in September 2014. The note is secured by the financed piece of equipment. | 20,791 | 28,286 | ||||||
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| 153,085 | 151,569 | |||||||
Less: portion due within one year | 54,292 | 45,091 | ||||||
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| $ | 98,793 | $ | 106,478 | |||||
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NOTE 5 – CAPITAL LEASE OBLIGATIONS
The Company leases various machinery and equipment under capital lease obligations, which amounted to $132,294 and $123,283 at June 30, 2013 and December 31, 2012, respectively . The first lease requires monthly payments of $2,841, includes interest at a rate of 4.05% and matures November 2016. The second lease requires annual payments of $8,369, includes interest at a rate of 3.00% and matures March 2016. The assets and liabilities under capital leases initially are recorded at the lower of the present value of the minimum payments or the fair value of the assets. The assets are depreciated over the lower of their related lease terms or their estimated productive lives.
The following is a summary of the property held under capital lease:
| June 30, | December 31, | |||||||
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Cost | $ | 157,768 | $ | 157,768 | ||||
Less: accumulated depreciation | 27,278 | 12,570 | ||||||
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| $ | 130,490 | $ | 145,198 | |||||
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SABRE MANUFACTURING, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
As of June 30, 2013 and December 31, 2012 and the three and six months ended June 30, 2013 and 2012
NOTE 5 – CAPITAL LEASE OBLIGATIONS(Continued)
Depreciation expense on assets under capital leases totaled $7,888 three months ended June 30, 2013. There was no depreciation expense for the three months ended June 30, 2012. Depreciation expense totaled $14,708 for the six months ended June 30, 2013. There was no depreciation expense for the six months ended June 30, 2012.
NOTE 6 – 401(k) RETIREMENT PLAN
The Company has a 401(k) defined contribution plan covering substantially all employees. Eligible employees may contribute up to the federal limit of their annual compensation into the plan. The Company contributed to the 401(k) plan $8,408 and $10,724 for the three months ended June 30, 2013 and 2012, and $17,575 and $21,432 for the six months ended June 30, 2013 and 2012, respectively. The Company has funded or accrued all calculated contributions as of the balance sheet date.
NOTE 7 – LITIGATION
During 2011, an individual filed suit against the Company and six other defendants claiming personal injury resulting from a product liability matter. The plaintiff seeks unspecified general and compensatory damages from the defendants. The Company is vigorously defending this action. At this time it is not possible to estimate the Company’s liability, if any, in this matter. Moreover, the Company believes any allocated liability would be covered by its liability insurance policy.
NOTE 8 – NON-CASH INVESTING AND FINANCING
Supplemental disclosures of non-cash investing and financing activities for the six months ended June 30, 2013 is as follows:
During the six months ended June 30, 2013, the Company financed $32,069 of equipment through capital lease obligations. Refer to Note 5 for additional information.
NOTE 9 – SUBSEQUENT EVENT
Subsequent to the year ended December 31, 2012, the Company was acquired by Manitex International, Inc. through an asset purchase agreement effective August 2013.
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